One critical thing to understand about real estate is that you’re likely talking about what will be one of the largest and most important financial transactions in someone’s life. A house is more than just the sum of its parts.
For a buyer, it’s a chance to make the types of incredible memories that they’ll think about for the rest of their lives. For the seller, it’s a chance for financial security – to finally see a major investment pay off. Because of that, it’s also a scenario where emotions tend to run high.
Just because you’re talking about the wholesale real estate business does not change this fact. One ingredient to success is not only empathizing with distressed sellers but also recognizing the underlying motivations of everyone involved.
Because the mechanics of the transaction themselves tend to be cold and cynical – there are so many forms to sign, documents to fill out, etc. – it can be natural to think of the entire process through this lens. Similarly, because you’re involved in a wholesale real estate transaction instead of a “traditional” one, you may assume that the emotional stakes are inherently lower than they otherwise would be.
Both of these assumptions make sense to a degree, but they’re also huge mistakes to make that can cost you dearly in the long run.
Perhaps the seller in question is going through a period of significant financial distress. We’ve all been there at some point in our lives, so it’s not too difficult to imagine what that feels like. Rather than using it as an excuse to “play hardball,” you could empathize with the seller instead.
Try to find out more about their situation, not to exploit it – but to show someone that you’re working with the best intentions and want to help in any way you can. If a seller has the ability to pick between a few different wholesale real estate professionals to work with, this may just be the factor that helps them decide to work with you.
Or, maybe they’re going through a significant life event like a divorce or a death in the family. Obviously, they’re selling the home in question under less-than-ideal circumstances. Knowing this can, at a minimum, help you “walk a mile in their shoes,” so to speak. You’ll understand where they’re coming from and why they’re making some of their decisions. This can help you more successfully navigate the remainder of the transaction.
If nothing else, understanding a seller’s emotions simply gives you the opportunity to help another human being – to recognize that chance if it presents itself. The fact that it can also help you negotiate more favorable terms and ultimately empower your investment portfolio should just be considered “icing on the cake” in that scenario.
It all goes back to the idea that none of us truly know what anyone else is going through. If you encounter someone who is acting rude or irrationally, the reasoning can sometimes be more complicated than it appears. When you don’t make an effort to understand the seller’s emotions, this usually turns into the type of aggression that isn’t good for anyone. When you do, it helps you make sense of the situation so that you can make more appropriate choices given the context of someone’s actions.
Another reason why understanding seller emotions is so pivotal in wholesale real estate has to do with the concept of trust. Again, you’re talking about one of the biggest transactions that someone will ever make. They don’t want to feel like they’re being taken advantage of. Even if they intellectually understand that you’re trying to make a profit for yourself, they still want to know that they’re being taken care of emotionally. You can’t get to this point without trust.
Therefore, the ability to connect with someone on a deep, legitimate, emotional level builds that trust and significantly increases the likelihood of successful deals at the same time.
It’s also something that helps to build long-term relationships. You never know how someone’s situation may change one, five, or even 10 years down the line. You may not get a call from his person with a similar property tomorrow. But one day, they may need to sell, and if you’ve made this type of positive impression and if you’ve gone out of your way to show that you do have their best interest at heart, you’ve increased the chances that when they do pick up the phone the first number they dial is yours.
Overall, seller emotions are just as important in wholesale real estate as in the dollar value attached to the property. By making a true effort to understand where someone is coming from – be it financial stress, personal circumstances, or some other matter entirely – wholesale real estate professionals can tailor their approach in a way that makes sense for the situation. This allows them to negotiate more effectively.
When armed with this understanding, you can better navigate the inherently complicated world of real estate transactions with sensitivity, grace, and fact – which is a tremendously advantageous position to be in, regardless of your long-term wholesale real estate plans.